Gränges' half-year report 2024: A record quarter

Second quarter 2024

• Sales volume increased by 8.6 percent to 130.9 ktonnes (120.5) and net sales increased to SEK 6,145 million (6,008).
• Adjusted operating profit increased to SEK 471 million (450).
• Adjusted operating profit per tonne amounted to 3.6 kSEK (3.7).
• Operating profit was SEK 471 million (450) and included no items affecting comparability (-).
• Profit for the period amounted to SEK 314 million (316).
• Diluted earnings per share amounted to SEK 2.94 (2.97).
• Adjusted cash flow before financing activities was SEK 399 million (779).
• Total carbon emissions intensity (scope 1+2+3) decreased to 7.1 tonnes CO2e/tonne (8.4).
• The share of sourced recycled aluminium increased to 46.6 percent (41.1).

 First half year 2024

• Sales volume increased by 5.1 percent to 252.8 ktonnes (240.6) and net sales decreased to SEK 11,573 million (11,976).
• Adjusted operating profit amounted to SEK 827 million (851).
• Adjusted operating profit per tonne amounted to 3.3 kSEK (3.5).
• Operating profit was SEK 827 million (851) and included no items affecting comparability (-).
• Profit for the period amounted to SEK 551 million (570).
• Diluted earnings per share amounted to SEK 5.16 (5.35).
• Adjusted cash flow before financing activities was SEK 494 million (1,066).
• Financial net debt was SEK 3,031 million on June 30, 2024 (SEK 2,741 million on December 31, 2023), corresponding to 1.3 times adjusted EBITDA (1.1 times on December 31, 2023).
• Total carbon emissions intensity (scope 1+2+3) decreased to 7.3 tonnes CO2e/tonne (8.6).
• The share of sourced recycled aluminium increased to 46.0 percent (39.3).

Comments by Gränges’ CEO Jörgen Rosengren: Stability and profitability

In the second quarter, market demand was muted, but stable. Both the backlogs and overstock that characterized last year are now more or less gone. Relative to 2023, the automotive market was somewhat weaker, and the HVAC market normalized.
Our strong sales focus enabled us to return to growth in the beginning of the year despite weak demand. In the second quarter, those efforts yielded even better results. New business was a key driver behind our 9 percent sales volume growth in the quarter.
Record-high operating profit and good cash flow
We continued as planned to compensate most of the customer price pressure and wage inflation with productivity. Combined with our good volume growth, this resulted in a 5 percent increase in operating profit to SEK 471 million, our best quarterly result ever.
We also continued to improve working capital efficiency, offsetting the increase in the aluminium price. This kept our net debt stable in the quarter even after funding capacity expansion and dividend payment. Our balance sheet thus remains strong, which creates stability and flexibility.
Finalizing the first step of our strategy – a strong foundation for growth
Our strategic plan, Navigate, was developed in 2021. Its first step aimed at restoring good profitability, and at completing our multi-year capacity investment programs in the US, Europe, and Asia. We intend to finalize this first step of Navigate in 2024. Our increased production capacity, improved profitability and stronger balance sheet together form a solid foundation for growth. Based on this foundation, we will now gradually shift focus to our strategy’s second step – “Build” – which aims at building a leading company in our industry.
New partnership to support electrification growth
Over the past two years, our electrification solutions have been in high demand in Asia, resulting in strong volume growth and a high capacity utilization locally. We have therefore agreed to extend our strategic partnership in China with Shandong Innovation Group. The agreement gives Gränges ownership of a production facility in the Shandong province through an equity transaction. The new partnership enables us to continue to take market share and grow in the Asian electrification market. It will take some time to realize these benefits, but we expect a marginally positive contribution to our earnings per share in 2025. Read more about the new partnership on page 6.
Carbon footprint and recycling on record levels
Our long-term focus on sustainability resulted in new records, for instance an all-time-low carbon emissions intensity. In fact, we are already now in line with our 2025 climate goals, more than a year ahead of time. Record-high recycling contributed to our low emissions, but circularity is also a strategic objective in its own right. The 230 ktonnes we have recycled in the last year in cooperation with our downstream and upstream partners put us halfway to our 2030 circularity goal.
Stable outlook for the third quarter
End-customer markets remain hard to predict but appear comparatively stable in the near term. We expect our continued focus on new business to drive a mid-to-high single-digit percentage volume growth in the third quarter compared to 2023. We also intend to offset any further
price pressure and wage inflation with further productivity improvements.
People make the difference
I am very proud of the competence, commitment, and stability that our global team has continued to show during these very turbulent last few years. Having demonstrated a new level of performance also gives us increased self-confidence. We now have a good foundation for further growth, and for building a truly leading company. I’d like to close by again thanking all my colleagues throughout the Gränges family for your outstanding work.

Jörgen Rosengren, President and CEO

Webcasted presentation
CEO Jörgen Rosengren and CFO Oskar Hellström will present Gränges’ half-year report 2024 at a webcasted conference call Friday July 12, 2024, at 11.00 CEST.
Join the live webcast here. To participate in the Q&A following the presentation, please register here. Upon registration, phone numbers and a conference ID to access the call will be provided. Please dial in a few minutes before the start of the webcast. The presentation will be in English.